"Cosmetology Lawsuits Test Business Model for Beautician Training"

The Daily Journal, May 27, 2014

By Laura Hautala, Daily Journal Staff Writer

Jessica Morales signed up for a cosmetology training program but ended up working at the school's for-profit salon in Los Angeles for no pay. Those are the claims in her proposed class action against the business entities involved in the school, and Morales and her classmates are not alone.

Her lawsuit is one of at least 17 across the country - five of which are in California - alleging that the business model of cosmetology schools is blatantly illegal.

"If you're using labor in a for-profit business, well, you have to pay somebody," said Leon Greenberg, a Las Vegas-based attorney who has filed 15 of those lawsuits in eight different states. Three are in California.

The cases pit two different views of cosmetology training programs against each other: schools, or scams? There's little case law to help determine what the outcome will be. Lawyers on both sides of the issue say though they bear some resemblance to the recent wave of lawsuits dealing with unpaid internships, these are the first legal actions to look at the business model of cosmetology training programs.

Morales and her fellow stylists cut hair, give manicures and provide other personal grooming services in schools that run for-profit salons, Greenberg said, and it's the profit he takes issue with.

"They're making money here," Greenberg said. Students pay tuition to the school, and then work shifts at hair salons with little supervision and not receiving any pay, he said.

Greenberg is partnering with Bay Area attorneys for his cases in California's federal courts. Bryan J. Schwartz in Oakland and David A. Lowe, managing partner at Rudy, Exelrod, Zieff & Lowe LLP in San Francisco, are both working on the cases, which were filed in October and amended in May.

One law firm represents all the California-based programs that the aspiring stylists are suing, which include companies doing business as Paul Mitchell the School, Milan Institute of Cosmetology, Marinello Schools of Beauty and Aveda Institute.

The defense lawyers in the federal lawsuits are Edward M. Cramp and Julie A. Vogelzang of Duane Morris LLP in Los Angeles.

Cramp takes a completely different view of the situation, describing the lawsuits as an attack on the foundation of professional education programs: hands-on experience as required under state law.

"Cosmetologists in general are underappreciated in terms of the training and talent and expertise it takes to become a really great hairdresser," he said. "You probably don't want your hairdresser coming right out of cosmetology school picking up a pair of scissors and cutting your hair."

"You don't learn to cut hair by doing anything other than cutting hair," Cramp said. "Part of licensure under cosmetology is they have to spend a certain amount of hours doing hands-on training."

What's more, Cramp said, the lawsuits could impact other professions that require training hours to earn a degree or a license. "If these people are employees while they're enrolled in college earning credit - while participating in state-mandated clinical hours - then the same principles are going to apply across the higher education spectrum."

Schwartz said he doesn't buy this reasoning, because the for-profit business model the schools run on is unnecessary. Normal academic training doesn't create profits, he said.

"You're not generating revenues for the college when you go to school there," Schwartz said. "We look at it as a scam."

That stance distinguishes the lawsuits from most employment class actions, Lowe said, which are usually based on an otherwise typical business violating a wage order or part of the labor code with some of its practices.

"What makes these cases interesting is that this isn't a dispute about whether a policy is being enforced, like some meal or rest break cases," Lowe said. "This is really a case about whether a for-profit business can evade the wage laws by characterizing the workers as students. That's just a question of whether their business model violates the law."

Cramp also said the lawsuits were atypical, but not for the same reason. The focus on school-based training is what alarms him.

"Look, anyone who thinks these cases are about anything other than money - it's plaintiffs' lawyers trying to make themselves rich by converting students into employees."

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